Question
Meile Machine Shop, Inc., has a 1-year contract for the production of 200,000 gear housings for a new off-road vehicle. Owner Larry Meile hopes
Meile Machine Shop, Inc., has a 1-year contract for the production of 200,000 gear housings for a new off-road vehicle. Owner Larry Meile hopes the contract will be extended and the volume increased next year. Meile has developed costs for three alternatives. They are general-purpose equipment (GPE), flexible manufacturing system (FMS), and expensive, but efficient, dedicated machine (DM). The cost data follow Annual contracted units Annual fixed cost Per unit vanable cost General-Purpose Equipment (GPE) 200,000 $150,000 $16.00 Flexible Manufacturing System (FMS) 200,000 $225,000 $14.50 Dedicated Machine (DM) 200,000 $500,000 $13.00 The option GPE is best when the contracted volume is below 50000 units (enter your response as a whole number) The option FMS is best when the contracted volume is between and units (enter your responses as whole numbers).
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